For Free: Your Own Arcade - Not Kidding

[SirPeale]

It may be then that the biz IS turning a profit in that since they are not applying the rent to the cost of operations yet.  The $800 adds a pretty big nut.

It may be profiting to *them* as of this second, since they're partners and there is no rent involved.

I would press ahead, and get the financials.  See exactly what the costs are.  Check out ALL the contracts (insurance, games, internet, etc.)  Can you shave those costs, do you need internet for example?  Can you replace the phone lines with a cell line and use the same line for your own home phone?  Can you get cheaper insurance? 

You always want to estimate high when getting expenditures.  Here's the general breakdown:

$800 - rent
$80 - property tax
$50 - insurance
$250 - electricity
$60 - telephone
$60 - T1 line
$300 - oil (heat) but only during the cold months

and I'm sure I'm forgetting something in there.

4. You say you would need to cover the expenditures for 6mo which makes it sound like the biz is NOT turning even a $1 profit per/mo. 

Most businesses don't start turning a profit until they're well established.  As this has just gotten off the ground six weeks ago, they've got a ways to go.

- This may have been the most misleading thing in the article, note it is to THIER benefit to have that statement in the article as it generates more interest in the town, that is a pretty big jump for a reported to make all on his/her own: 

 "Though he declined to open up his books, Koloski said Jester's Court already is turning a profit. With his own finances taken care of and a profitable system in place, Koloski said it's time to bring in a new owner and move on."

I would press him on this and find out EXACTLY what they meant.  It is a warning flag if it is not true.

They're generally disappointed with the way the article turned out.  Some things have been stretched, some things have been completely omitted.  Like the partner (Craig) isn't even MENTIONED in the article, yet there is a quote in the article that is his (I don't remember what one.)

The 'turning a profit' line in the article is terribly misleading as well.  It implys that someone will just move in and already be raking in cash, hand over fist.  Craig explained that's simply not the case. 

In truth, 'turning a profit' in the business sense means that the business is self sufficeint.  In the case of Nick, the reporter asked if he'd recouped his costs, and Nick replied yes, he had.  Of course he had!  There was a bare minimum of costs to *him* to begin with (about $500!  The major costs so far have been to Craig, somewhere around $6,000.  I don't think that's all *arcade* related, as the entire building is a project.

It's been open on and off for the last six weeks, due to comitments elsewhere.  Don's been opening the place up at night (from about 3-8/9) sometimes three days a week, sometimes four.

Those probably are the best hours, unless you can get in on that bar traffic.  Even if they don't "poke a hole" you should get runoff after hours.

You might consider early day-time (especially weekends) having catered parties ala Chuck E Cheeze to make use of the space during the day.

Actually, there's a non-competion clause in the lease regarding food, as to not compete with the place next door (which is owned by Nick).  Some food is okay, ie chips, candy, soft drinks, but prepared foods - hamburgers, frys, is not.

BTW: Who the heck is Don?

I keep calling him that in my head.  I meant Nick.  Sorry!

[SirPeale]

All right, to bed now.  We'll continue this discussion tomorrow sometime.  Oh, it's after midnight, then later today. 

[mairsil]

Those probably are the best hours, unless you can get in on that bar traffic.

[RetroJames]

Those probably are the best hours, unless you can get in on that bar traffic.

[SirPeale]

Me too.

[RayB]

Sounds less and less appealing Peale. Too risky. You and I both know arcades have gone downhill for years. Why would this one succeed?

Plus if the coffee shop is being replaced by a bar, you'll have people petitioning the city to restrict kids from your arcade (too close to alcohol) and there even might already be by-laws regarding age restrictions for kids. In my experience, the smaller the city, the more they seem to have silly by-laws against arcades (can't have them if they are near schools; or can't have them let kids under 16 in, etc, etc).

Then there's costs of insurance, alarm/security. You won't want to be the manager all the time, so figure in the cost of a manager/change person half the time at minimum wage or higher (higher the better, otherwise theft will be a high possibility). At $6 an hour, someone working 40 hours will cost you $980 a month.

I say forget it! The hobby you LOVE will become the job you HATE! ;-D

~Ray B.

[iwillfearnoevil]

1) They have, however, taken 90% of the start-up costs and hard work out of their own pockets

i don't take this much as a value add to you. as these downtowns attempt to revitalize, the landlords are renovating all the buildings - even getting government money to help. if they find business willing to move in while renovating, they'll fix it up to their specifications anyways. so much of that, they'll have to do for any business. also there is so much free advertising from newspapers and local tv stations for new businesses, that costs nothing to them. i am sure they generally want downtown to suceed, but i'm sure a lot of property is owned and these businesses are just tools to get more businesses interested. not a bad idea on their part, but nothing a startup couldn't do. i'm sure they made phone calls to find an operator and to an internet service provider, but who can't?

lastly if they are looking to sell, they are figuring the $800 rent they receive from you will be more than the profit they will receive from the arcade. good luck crunching the numbers. perhaps the number of quarters to cover all the expenses plus a real good profit for you is obtainable.

[JoyMonkey]

You'd probably be eligible for some kind of a loan from the Claremont Development Authority to give you a helping hand until business is booming.

[Luxury]

Just an idea-
If the coffee shop isn't closing do to lack of business and turing into a bar - then sell coffee at the arcade.  Go a bit more upscale with Coffeshop/Arcade.  You then have 2 areas for profit, and one will hopefully balance the other out if one isn't performing as well as expected.  Load the space up with cocktail machines if possible.

[pointdablame]

Just an idea-
If the coffee shop isn't closing do to lack of business and turing into a bar - then sell coffee at the arcade.  Go a bit more upscale with Coffeshop/Arcade.  You then have 2 areas for profit, and one will hopefully balance the other out if one isn't performing as well as expected.  Load the space up with cocktail machines if possible.

Why would he load the place up with cocktail machines if they take more floor space than uprights?   And you certainly don't want people with hot coffee using your cocktail machines as coffee tables.

[SirPeale]

They're still selling coffee.  Besides, it's in the lease to not sell it.

Giving it away, however...

[Gunstar Hero]

You know, I'd still take this opportunity and run with it... I've been dying for another chance to have my own business since my game store crashed and burned... 

A $20000 business loan wouldn't be all that hard to get, and when the place is open full time (I'd say 2pm to 10pm sunday to thursday, 10am to 12pm on friday/saturday) it's income will go up. Plus once summer hits, it's going to be quite a bit busier, with kids out of school, expanded summer hours, ect.

With a T1 line in the building and some extra space/computers maybe even set up a little online gaming center in the back with hourly rates... I know those places have popped up all over the place around where I live.

Finally, set up a counter where customers can buy and sell used console games . Arcades can't compete with the home market, they have to embrace it, and you'll be shocked when kids trade in old games for tokens. Seems silly, I know, but I'm KNOW that it will work! I work for one of the big video game chains now, and sometimes half of our business is trade ins. Almost every day in the summer I see kids trade in a couple old games and run down the street to play Initial D or The Fast and the Furious and the local bowling alley/arcade.

Right there your business embraces all forms of gaming... Arcade, console and PC. Contests, tournaments... make it the ultimate destination after school.

Damn. That would be cool.

[SirPeale]

Yeah, it would.  But I don't think I'm cut out for this.  If I had savings, I would probably risk it, but you have to pay back a loan.

[ChadTower]

Arcades can't compete with the home market, they have to embrace it, and you'll be shocked when kids trade in old games for tokens. Seems silly, I know, but I'm KNOW that it will work! I work for one of the big video game chains now, and sometimes half of our business is trade ins. Almost every day in the summer I see kids trade in a couple old games and run down the street to play Initial D or The Fast and the Furious and the local bowling alley/arcade.

---gosh-darn--- that's a good idea.  I mean a GOOD, practical idea that would work very well.

[Gunstar Hero]

Yeah, I think that's the secret to success right there.

So if it works, I want my cut Peale! YOU HEAR ME?! I WANT MY CUT!!!


 

[Gunstar Hero]

Oh. Well, disregard that last message then.